This document provides technical guidance for the design of Forecast-based Financing (FbF) interventions. It has been developed from the lessons and experiences of several ongoing pilot projects, making this manual a living document that will be updated on a regular basis.

The target audience for this document includes disaster risk managers, meteorologists, hydrologists and people working in other disciplines that are involved in the design of FbF mechanisms. This manual will be used by governments, humanitarian and development organizations.

Each of the guides of the manual offer a set of general ideas for implementation of FbF interventions, they are mainly an advice and by no means a mandatory step by step process. Although they describe steps, the implementation of them will depend on the context they will be used in.

It is divided into 7 sections, which can be accessed through the links below:

This Manual aims at providing guidance for the implementation of the Forecast-based Financing strategy for the German Red Cross, but also for the Red Cross Red Crescent movement and partners.

Special thanks are due to the Peruvian Red Cross, Bangladesh Red Crescent, Uganda Red Cross, Mozambique Red Cross, Togolese Red Cross, Tanzania Red Cross and Ethiopian Red Cross for leading the implementation of Forecast-based Financing pilot projects, lessons and good practices from these projects have made this document possible.

Expert reviews of drafts were also provided by colleagues from the International Federation of Red Cross and Red Crescent Societies (IFRC), Start Network, World Food Programme (WFP), Food and Agriculture Organization (FAO), Deutsche Welthungerhilfe (WHH), World Vision, International Research Institute for Climate (IRI), United Nations Development Programme (UNDP), University College London STEaPP (UCL), Reading University, Oxford University (Institute for Science, Innovation and Society) and University of Lugano, among others.

The terminology presented in the document has been analyzed in detailed by practitioners that are implementing FbF interventions, as well by a broad number of actors involved in Early Warning Early Action.

Criteria for identification and design of Forecast-based Financing Interventions

Forecast-based Financing (FbF) is a mechanism that uses climate and weather forecasts to trigger timely humanitarian action, before a hazard hits the exposed population. These actions are automatically funded when the triggering forecast is released.

This mechanism has been progressively developed since 2008. Several pilot projects are ongoing, which are contributing to build evidence about the potential to transform the current humanitarian system. Lessons, best practices and recommendations from these projects are the base for the development of a solid Forecast-based Financing knowledge management strategy.

A successful Forecast-based Financing implementation will depend on several aspects, ranging from availability of risk information to engagement of potential stakeholders.

Learning from ongoing pilot experiences, this guide sets out a set of new considerations that can be used to select intervention areas that are most “ripe” for the introduction of Forecast-based Financing, encouraging the establishment of interventions that further consolidate knowledge and practice in this area. Based on the results of discussing each of the questions in this document, practitioners can focus their priorities in the design of a specific Forecast-based Financing intervention, focusing on the areas that need greatest support.

The guideline is divided in four parts: Risk Assessment, Forecasts Capabilities, Government Level and Organization Level analysis. After exploring each of these considerations, practitioners can select countries and/or regions for Forecast-based Financing interventions, and gain an understanding of which hazards would be ideal for each project. The qualitative responses can also indicate where more work should be directed in a particular intervention; for example, if one region has excellent forecasts but not enough information about risk factors, extra effort in the project should be focused on identifying and analysing those risk factors rather than focusing in forecast capacity, in the same direction if the feasibility study identify that the DRM capacity of the implementing organization needs improvement, the project/intervention could include a component of capacity building . At the end of this guide, there is a set of suggested question that could be used by the researcher to guide the study towards a deep understanding of the best strategy to implement a Forecast-based Financing intervention.

Target Audience for this guide:

Scoping studies can be done directly by technical staff of the implementing organization/government, or could be conducted by external consultants. The process could take from one week to one month, depending on the level of details and geographical extension that is targeted.

A guide to trigger methodology for Forecast-based Financing

This guide will outline the design process of an impact-based forecasting methodology to be used to define forecast-based financing (FbF) triggers. It is meant to support stakeholders involved in developing triggers and provides step-by-step instructions and examples on how to do this. This is a living document, based on ongoing projects; it will be periodically updated to include best practice and lessons learned. If you have suggestions, please email: fbf(at)climatecentre.org.

Firstly, lessons learned from pilots around the world are presented.Second, each of the steps to develop triggers will be explained in detail. The target audience is institutions and/or government agencies interested in developing impact-based forecasting systems to enable early action.

This document presents reflections and lessons from the experience of several ongoing Forecast-based Financing pilot projects. It provides a 6 step process to select forecast-based actions that will be automatically funded and triggered based on forecast information. It is an illustrative reference document for Forecast-based Financing interventions. Red Cross and Red Crescent national societies and other humanitarian and development organizations engaged in Forecast-based Financing are encouraged to use this selection process in a flexible way for an effective outcome of their interventions, follow the process in the most flexible and iterative way according to the respective context.

Forecast–based Financing (FbF) is a mechanism that uses climate and weather forecasts to enable timely disbursement of funds to implement advanced preparedness actions before a potential disaster happens and early response intervention. Many times, early actions are not taken due to lack of available funds in the exact moment when they are needed or because of a lack of quality forecast information, absence of systems and procedures to use these funds effectively and also due to the short window of time for early action. The disbursement of funds for emergency assistance can then only provide relief after the fact, meaning only after the disaster strikes. Forecast-based Financing enables the implementation of these early actions, prior to a disaster, based on a sound understanding of risks, hazards, vulnerabilities, exposure, impacts, danger levels, forecast capability, predetermined triggers and precise community-level actions that can be implemented within the lead time.

Forecast-based Financing aims to build on existing early warning early action strategies and preparedness plans to minimize disaster risks and reduce the impact of disasters in communities ( see Early Warning Early Action - Mechanisms for Rapid Decision Making ). Institutionally, it will improve operational preparedness and response capacity to act early to reduce the impacts of disasters. Early response should be considered to deal with the residual risks (as risk 0 does not exist). Timely and qualitative response will ensure that further suffering is avoided.

Target Audience for this guide:

Prioritization of forecast-based actions requires engagement of actors at all levels, from residents, community committees, DRR field committees, civil society organizations, government (local and national) departments, Red Cross and Red Crescent national societies, United Nations agencies and other humanitarian and development organizations, research institutions including climate science community and private sector and other relevant actors. This guide could be used a broad range of actors.

Early Action Protocol (EAP)

In this section you can download an EAP template.Please take into consideration that to apply to the Forecast based Action by the DREF National Societies should have an Early Action Protocol and an Early Action Protocol Summary. The Early Action Protocol Summary is a shortened version of the EAP that follows the IFRC’s programmatic framework. All IFRC FbA by the DREF templates can be found here: fednet.ifrc.org/FbA

M&E Guide

Forecast-based Financing Financial Mechanism

For Red Cross and Red Crescent National Societies, one of the financial mechanisms available to fund the activities included in their Early Action Protocols is the Forecast based Action (FbA) by the DREF, which was launched in May 2018.

The International Federation of Red Cross and Red Crescent Societies (IFRC) has extended the scope of its long-standing global financing instrument, the Disaster Relief Emergency Fund (DREF) to include FbA. FbA by the DREF provides multilateral funding to National Societies, with an already developed EAP that need to secure financial resources in advance, for its implementation, which is one of the key elements of Forecast based- Financing.

Any National Society, with a developed EAP – in some cases developed with support from Partner National Societies - can apply to the FbA by the DREF. The Forecast based Action Fund is managed by the IFRC Disaster and Crisis, Prevention, Response and Recovery department.

Key elements of the FbA by the DREF

Who can apply: Red Cross and Red Crescent National Societies with a developed Early Action Protocol (EAP) that meets the IFRC quality criteria.Type of hazards: extreme hydrometeorological events

Possible amount to be funded: Up to 250,000 CHF

EAP Timeframe: 5 years

EAP Target population: Minimum of 1000 households. Costs that can be included in the EAP:

Readiness Costs: these include any ongoing costs and services that are deemed indispensable for subsequent trigger-based activation of an Early Action Protocol. The readiness costs can not exceed 25% of the total EAP budget.

Stock pre-positioning: Procurement of relief items that are needed as preparatory measures to be ready and implement the trigger-based early actions. The pre-positioning of stock cannot exceed 40% of the total EAP budget. Any requests above must be justified. Pre-positioned stock should include relief items which can be stored over the lifespan of the EAP ensuring adequate storage facilities, suitable transport links and appropriate insurance.

Trigger-based Early Actions: Activities included in the EAP to be taken once the trigger is reached and that will reduce the impact of the extreme weather event.